(FORTUNE Magazine) – Remember portfolio insurance? Fingered by the Brady commission as a culprit in the 1987 stock market crash, this hedging strategy seemed set to go the way of the dodo. Revenues at Leland O'Brien Rubinstein, the firm that invented the technique in 1980, immediately fell 50%. Then things really got biblical. In 1988 a fire gutted LOR's offices on the 13th floor of a Los Angeles tower. But CEO John O'Brien, 53, and University of California at Berkeley professors Hayne Leland, 48, and Mark Rubinstein, 45, never lost faith. Bolstered by the ultimate portfolio insurance -- lots of cash -- they managed to hang on in the dark days after Black Monday. Now a rejiggered version of their brainchild is again winning converts -- especially abroad. The trio today get 35% of their revenues from big investors in Japan, Britain, Australia, Finland, and Hong Kong, up from almost no foreign interest three years ago. What's new? For one thing, LOR's earlier formula ostensibly protected institutional investors against stock price declines only by selling stock- index futures. Now the firm uses options as well. This approach costs more, but it doesn't force clients to make transactions when the market is melting down. O'Brien, a longtime pension fund adviser, bullishly predicts that by 1992, portfolio insurance worldwide will be back to its precrash peak.